Posted by Frank on Sat, 12 Sep 2009 19:58 | #

labor force participation rates, sans bubbles, go down when wealth centralizes

The FDR myth. Can you explain why?

The middle class brings stability, but the wealthy invest best.

Posted by James Bowery on Sun, 13 Sep 2009 05:28 | #

Why not then have the government impose a negative property tax as a way of increasing quality of the economy?

Here’s the problem:

We nationally tax economic activity to pay for the protection of all property via the infrastructure of government.

So we tax the productive to pay for protection of the wealthy.

This corrupts the wealthy.

Remember, FDR quite carefully adopted every plank for Norm Thomas’s socialist platform, including the “wealth tax” but he then did a really nasty trick:  He ripped out the body of the statute and put in its place a highly progressive tax on income and capital gains—which, if you think about it, is change in wealth rather than wealth.

Do you understand why FDR did that?

Posted by Euro on Sun, 13 Sep 2009 18:22 | #

”...if you think about it, is change in wealth rather than wealth.

Do you understand why FDR did that?

Not sure I quite understand.Please explain.

Posted by James Bowery on Sun, 13 Sep 2009 19:18 | #

FDR represented wealthy interests who wanted centralized control of everything.  Centralizing in the government is fine.  Centralizing in corporations is fine.  So he adopted the worst aspects of Norm Thomas’s platform, which centralized in government and then took the only plank that would have allowed greater economic mobility, and replaced it with a tax on the upwardly mobile.  The only prominent politician that might have called him on this was Huey Long and Long was assassinated just prior to FDR’s monumental gutting of upward mobility.

I don’t know that FDR was the first “limousine liberal” but he was almost certainly the greatest.

Posted by kurt9 on Mon, 14 Sep 2009 22:55 | #

I don’t know that FDR was the first “limousine liberal” but he was almost certainly the greatest.

This is very true. The wealthiest American families in 1930 were the same ones in 1980. A look at the “Forbes 400” in 1982 showed that over 75% of them got their wealth through inheritance. A look at the more recent “Forbes 400” show that 75% of them are self-made entrepreneurs.

The obsession over “inequality” has always been misplaced. Inequality itself is not a problem. A lack of opportunity and upward mobility, on the other hand, is a very serious problem.

Posted by James Bowery on Tue, 15 Sep 2009 06:54 | #

I’m not sure if you got quite how perverse the limousine liberals are:

They are obsessed over inequality alright:  They hate equality.  They don’t want competition.  They don’t want a level playing field.  They hate the middle class because it provides potential competition for them so they want to make sure the middle class become an underclass that is dependent on the limousine liberals for the very roof over their heads, food they eat and water they drink, and always looking out for criminals that are going to mug them. 

The primary tool in their arsenal defending themselves from any competition is the confusion between wealth and income.

Posted by Frank on Tue, 15 Sep 2009 08:50 | #

Why not then have the government impose a negative property tax as a way of increasing quality of the economy?

This would aid those who couldn’t manage their finances from falling.

So we tax the productive to pay for protection of the wealthy.

The “productive” aren’t the ones who are best at investing. A painter who is a very good painter isn’t necessarily going to know how to maximise return on his income.

From the perspective of productivity, the ideal as any good capitalist knows is to pay workers the minimum needed to keep them working at optimum efficiency (including education) while investing the surplus. Those who don’t do this are replaced by those who do.

Business naturally gets bigger and bigger, and there’s the Iron Law of Oligarchy which points to how no matter what we do in this large society of ours it’s natural for an oligarchy to arise. It’s natural for an oligarchy to arise within any social structure, but ours is a large society so the elite that arises is far more powerful in ours.

Going by this and for the sake of argument going by the assumption that productivity is everything, it’s then best to put the most capable in the seat of the oligarchy. The best then should rise up, which they tend much more to do under the managerial elite as opposed to past elites which were far more prone to nepotism.

Elite skills and not wealth are required to break into the elite of our current society. According to Elite Theory, any society that prevents the most competitive elite from naturally rising will suffer a revolution in order to unseat the old, weaker elite. The current managerial elite is competently upward mobile and thus powerful.

FDR’s ridiculously high income tax did harm the wealthy because they must continue to bring in high revenue streams in order to support their high expenses. High income taxes do harm those who just make it into the highest income bracket far more than those who easily make it in, and there are loopholes, though lately those have been closing up.

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I actually support a large middle class and a government that actively seeks to prevent wealth concentration, but I don’t find your arguments solid. I don’t have the answers either, I embrace a fuzzy “distributism” ruled by an aristocracy which is kept free from temptation by wealth and pleasure and nepotism, but it can be good to debate like this regardless.

Posted by Frank on Tue, 15 Sep 2009 09:13 | #

The managerial class rules by its ability to manage other people’s wealth. It rules in government and in large corporations and organisations. Wealth is not a requisite. Ability is. Our society rewards the capable of a limited set of skills.

You previously pointed to how professional organisations make entry difficult, expensive education is required; but these are not the very top elite. These are usually mere workers for the wealthiest and otherwise most powerful in this country. Not everyone can manage a large organisation or deal with high pressure and workaholic hours. Nor is everyone able to lower moral standards like the Kennedys during Prohibition or of creating a war (defence industry benefits) or of yellow journalism etc.

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Truly you might possess some elite skills. You’d said before you’ve written games, and even simple games like Border Patrol seem to be very popular. Rockefeller and all his wealth could only buy the best game designers, but anyone with that kind of ability has free will (finances permitting) to go his own way with it. There’s probably no money in making free games (unless advertising or name recognition pays out), but money’s not what we’re all fighting for in here at least.

Posted by Euro on Tue, 15 Sep 2009 13:42 | #

I don’t think the Limo Libs are ,strictly speaking ,crass money grubbers.They are social/ethnic snobs for whom money is a mighty broadsword with which they maintain their position over society.The Roosevelts came from the old WASP elite that didn’t want to see “ethnics”,particularly Catholic ethnics,topple them from their commanding heights.Towards that end, they,the WASPS,coquetted with the Jew in Holy alliance.The rest as they say,is history.

Posted by James Bowery on Tue, 15 Sep 2009 14:21 | #

Frank, you’re poorly understanding the arithmetic of replacing income (which includes capital gains, dividends, rents and interest payments) taxation with a flat tax on net assets.

I’ve written up an illustrative javascript calculator program for folks like you and posted here at MR.

Posted by James Bowery on Tue, 15 Sep 2009 15:47 | #

Euro, you’re correct and there is a pattern here:

From “History of the Goths” by Herwig Wolfram, chapter “Formation of the
Gothic Tribes”, section “Political Organization and Culture of the Goths
at the Danube and the Black Sea”:

————————————————————————————————————-
During the fourth century the eastern Goths, the Greutungi, disappeared
from the Roman’s view.  At the same time the interest in the western
Goths, the Danubian Tervingi, increased to an unexpected degree, and the
sources multiply accordingly.  The ancient observers examined the
political and cultural institutions of the Tervingi, their social as well
as economic levels of development and patterns of behavior, together with
the military-strategic possibilities and expansionary tendencies that they
entailed.  The relatively great abundance of sources is further increased
by Ulfila’s translation of the Bible, which offers a wealth of
information, even though the events of the Bible took place in Roman
Palestine around the time of the birth of Christ.  Jewish traditions were
at that time in conflict with the culture of the great Hellenistic Roman
state.  There was a multiplicity of political jurisdictions, such as, for
example the Roman emperor and his governors, the Hellenistic kings, the
ethnarchs, the tetrarchs, and the oligarchic organs of Jewish
self-government.  In addition there was the personal power of the rich and
noble, and various tribal institutions existed.  Finally, Jewish law held
sway, a law that separated the peoples, the heathens, from the _populus_,
the people chosen by God.  This heterogeneous New Testament “politics”
unfolded before the backdrop of a Mediterranean culture based on public
literacy, a culture that knew an advanced money economy with a banking and
taxation system but that also experienced the tensions between the city
and its surrounding countryside.

Posted by Frank on Tue, 15 Sep 2009 19:22 | #

Net asset taxes would require property valuations and monitoring. That would also drive off the land traditional farmers and others who are not maximally productive. The goal is rekindle a middle class not to force the most efficient use of resources.

I don’t think you understood kurt’s post that “A look at the more recent “Forbes 400” show that 75% of them are self-made entrepreneurs.”

The current day wealthy are largely not old money. There is presently a large degree of upward mobility. The problem is the income disparity existing between those who have requisite skills and those who don’t make the cut on these limited skills (but might possess other skills which are not within this narrow category). It is not fair that Mexicans are undercutting unskilled labour. It is not fair that Indians are undercutting engineers. It is not fair that Chinese are competing against Americans at lower wages, taxes, and regulations. Wealth isn’t the issue. Income is.

Posted by Frank on Tue, 15 Sep 2009 19:35 | #

Warren Buffet makes a huge ROI every year. He does not live a lavish lifestyle. No one can spend the kind of money he possesses.

It’s dangerous to have such wealth concentrated around one man, but he went from nothing to wealthy because he’s good with managing money.

Do you know what he did with his great fortune? He gave it away. These people play with money like little children at a video game. They take no responsibility for their actions - Bill Gates sent in swarms of immigrants. They only want to earn big so they can win a big name and give it away to whatever cause society tells them is morally right.

They take no responsibility for how they acquire and manage the wealth - that’s where the problem is. And similarly, corporations are encouraged to pursue profit, any profit, without quibbling over consequences and morality. Investors want maximal ROI and vote with their money, and this encourages corporations to act immorally.

With the previous elite, before managerial society, capitalists would start a business, run it with their name using funds partly or totally from their own possession, and pass on the fortune built to their children.

The present society is totally different. Those who can handle money and run corporations are paid massive salaries. Those who possess other rare and in demand skills or skills that can’t be outsources easily (e.g. lawyers) are also paid very well. Those who invest badly (choose the wrong managers for their money) or who live lavishly tend to decrease net worth.

Posted by Frank on Tue, 15 Sep 2009 19:38 | #

Btw, you’ve quoted Machiavelli before. What would Machiavelli say a well run state should do with regards to the wealth of the state?

Posted by Frank on Tue, 15 Sep 2009 19:51 | #

Were it taken into account traditional farmers and small business owners whatever other cases exist where tradition and roots and self sufficiency are the driver behind relatively low productivity and need for wealth: then I’d be for a wealth tax on those who possess more than some huge number, say $50 million - assuming such is doable.

But that alone won’t solve the problem. Immoral corporations can run on pools of wealth, and you’ve got foreign investors to consider. What would be done if investors simply left with their wealth?

A similar scenario would ensue if investing or living in the US wasn’t as rewarding as other countries, unless of course taking wealth out of the country were declared illegal.

Posted by James Bowery on Tue, 15 Sep 2009 20:52 | #

Frank, we aren’t on different sides.  Just look at the real numbers. Apply your basic skills.

See my response to you placed under the NAT calculator I put up for you.